The International Journal
of Not-for-Profit Law

Volume 15, Issue 2, December 2013

By Fernando Mendez Powell*

The third sector broadcasting movement has gained significant momentum in recent years. During the last decade, many countries provided legal recognition to the sector for the first time, and advocacy efforts to obtain such recognition in other jurisdictions are ongoing. However, with legal recognition for the sector also often comes special regulation for it. Special regulation can aid the development of the sector, but it can also, intentionally or not, hinder the effectiveness and viability of third sector broadcasters. While the justifications and rationales for the special regulation of commercial and public sector broadcasters have been amply discussed in academic literature, third sector broadcasting regulation is, in comparison, an understudied field. The present article looks at the different rationales under which the regulation of third sector broadcasting is justified and at some examples of restrictions commonly imposed upon third sector broadcasters. The goal is to assess whether special regulation for third sector broadcasting is necessary or desirable.

Introduction

Third sector broadcasting (TSB) has existed in some form in most countries in which broadcasting activity is not an exclusive monopoly of the State. However, the sector has traditionally suffered from lack of legal recognition of its condition as a separate sector.1 The lack of legal acknowledgment of TSB as a distinct form of broadcasting has led to third sector broadcasters (TSBs) being subjected to regulation that has been designed with commercial or public sector broadcasters (PSBs) in mind and that is inappropriate for them. This has been identified as one of the main barriers impairing the development of the sector.2 Fortunately, this situation has been improving in recent years, as during the last decade several countries have adopted specific legislation or regulation regarding TSB. Examples include Ireland (2001),3 the United Kingdom (2004),4 India (2006),5 Uruguay (2007),6 Argentina (2009),7 Chile (2010),8 and Spain (2010).9 In each of these jurisdictions, some broadcasters which could be considered TSBs had already been operating before the introduction of sector-specific legislation.

While special regulation designed with the needs of the sector in mind can greatly aid the development of TSB, such regulation can also have the effect of hindering the effectiveness and viability of TSBs if it unnecessarily restricts their activities.10 The goal of this article is to assess whether there are any reasons which justify applying to TSBs special regulation, beyond that regulation already applied to other broadcasters and to other entities in the nonprofit sector. For this purpose, the objectives commonly pursued through the general regulation of third sector organizations are contrasted with those pursued through special TSB regulation in order to determine whether there is an added value in having the latter or, on the contrary, whether imposing special restrictions to TSBs is redundant or even counterproductive.

The concept of TSB is introduced and explained in Section 1. Section 2 briefly details the rationales commonly used to justify special regulation of commercial and public sector broadcasters; it is followed by Section 3 which discusses the rationales for special TSB regulation and how they may overlap or differ from those of the general regulation of third sector organizations. In Section 4, some examples of the type of special regulations that can be imposed to TSBs in pursuance of the goals detailed in Section 3 are presented, and their relative merits are discussed. Section 5 comments on the negative impact that unnecessary restrictions can have on the effectiveness and viability of TSBs and consequently on the development of the sector; the other side of the coin, how adequate special regulation can actually be beneficial to the sector, is discussed in Section 6. The article concludes that some regulation of TSB is justified and desirable, but that care must be taken in policymaking as any unnecessary restrictions can have significant detrimental consequences for individual TSBs and for the sector as a whole.

1. What Is Third Sector Broadcasting?

The two best known sectors of broadcasting are the public sector and the commercial sector. The public sector is comprised of “official broadcasters,”which are under direct control of the government or a branch thereof;11 and “public service broadcasters,” which are also created by the government but provided with legal and financial independence and a mandate that makes them accountable to the public in general rather than to a specific governmental authority.12 The commercial sector is comprised of broadcasters which are controlled by private parties and have profit-seeking as the primary purpose of their operations.

TSB is an umbrella term used to refer to forms of broadcasting which do not fit within the two categories described above. At the most basic, TSB can then be said to be all broadcasting which is not established by the State and which does not have the generation of profits as its main purpose. In this sense, the third sector is sometimes referred as the “private nonprofit”13 or the “non-commercial, non-public”14 sector. Licenses for TSB are often issued to organizations that fall within the realm of third sector or civil society. Different jurisdictions have different eligibility requirements, but examples of entities which often engage in TSB include community-based associations and cooperatives, charity organizations, religious institutions, and special interest groups representing students, youth, ethnic, LGBT, and seniors.15 In this relation, the 2010 Chilean law has been innovative in listing a large range of types of nonprofit organizations as eligible for TSB licenses, including trade unions and sports club.16

Broadcasting by educational institutions and indigenous communities is also often considered to fall within the third sector. There is a gray area in the cases of public educational institutions and indigenous communities, which are public law entities and therefore do not fall within the concept of “private, nonprofit.” However, broadcasting in which these types of entities are license holders is normally considered TSB if they are sufficiently independent from government control.17 The law of Georgia is notable for expressly establishing that TSB licenses can be issued to entities of public law.18

A term commonly associated with TSB is “community broadcasting.” Some use the label to refer to all forms of TSB. Others use it to refer specifically to a particular type of TSB, in which participation in the administration of the station and the production of content for it is open to all members of the intended audience, be it a geographic community or a community of interest.19 Terms such as “ethnic,” “indigenous,” “religious,” and “educational” broadcasting are sometimes used to refer to broadcasting activities by third sector groups which do not necessarily follow the participatory model associated with community broadcasting under the narrower definition.20 In fact, it has been suggested that acknowledging the differences between various forms of TSB and tailoring regulations and policies applicable to each according to its nature and needs can facilitate the development of the third sector as a whole and that of each of its subsectors.21

Providing a framework under which TSB can develop is an obligation under international human rights law. The access to broadcasting licenses cannot be restricted to organizations formed under laws designed for for-profit purposes; persons seeking to exercise their freedom of expression through the airwaves in pursuit of nonprofit goals should not be forced into legal forms inadequate for their purposes.22 Moreover, TSB has been demonstrated to be a valuable alternative to for-profit broadcasting. TSB helps reduce the abundant inequalities in access to outlets for the dissemination of information;23 provide local broadcasting services in areas that are not of interest of commercial broadcasters;24 provide broadcasting services in their own languages to minority groups where this is not attractive to the commercial sector or practical for the public sector;25 and provide a greater diversity of information than is possible from the public and commercial sectors.26 These are all reasons why policy makers should consider aiding the development of TSB in any way they can. However, it should never be considered that the primary role of TSB is to compensate for the deficiencies of the other two broadcasting sectors.27 The right of persons to engage in broadcasting for nonprofit purposes is independent of the quality and diversity of the commercial and public services available. Among others, the OAS Special Rapporteur on Freedom of Expression has noted:

The different kinds of media (public and independent of the executive, private for-profit, and community or private non-profit) must be recognized and have equitable access to all available transmission technology.28

Beyond the basic requirement of allowing third sector actors access to broadcasting licenses, the potential benefits of TSB makes it desirable to recognize TSBs as a separate class of broadcasters subject to a special framework which takes into account their special nature and purpose and which is aimed at aiding their development.29 For example, while commercial broadcasters can be required to pay license fees in proportion to the profits they can be expected to derive from the exclusive exploitation of radio frequencies, the nonprofit nature of TSBs means that access to frequencies should be free for them or that license fees should be limited to the recoup of the licensing authority’s administrative costs.30 Other examples of special regulations which can aid the development of the sector include simplified licensing procedures which do not require the assistance of legal or engineering experts that third sector organizations may be unable to afford,31 or even the omission of the license requirement altogether in areas where there is no competition for licenses.32 When special benefits of this type are granted to TSBs, they are also often accompanied by special restrictions on their activities, beyond those applied to commercial broadcasters. Before proceeding to analyze whether such special restrictions may be justified, it is convenient to consider the reasons why special regulation is applied to the other two sectors of broadcasting.

2. Why Is Broadcasting Regulated?

Except for those cases in which it is a complete State monopoly, broadcasting has always been subjected to some form of regulation. Rationales for such regulation include the spectrum scarcity which is considered to require limiting broadcasting activity to a few actors favored by licenses;33 and the perceived pervasiveness of the medium which is considered to require applying to it higher standards in areas such as decency.34 The validity or lack thereof of these rationales has been amply debated in academic literature.35 It is not necessary to dwell on this topic, as the focus here is on those special regulations that apply only to TSBs, while matters such as decency standards should normally apply equally across all sectors of broadcasting.36 However, contrasting the rationales for the regulation of commercial and public broadcasters with those used to justify special regulation of TSBs may prove useful.

2.1 Special Regulation of Commercial Broadcasters

Examples of regulations commonly applied to commercial broadcasters include special ownership and control concentration rules;37 minimum quotas for desirable types of content such as nationally produced content or content aimed at children;38 the obligation to provide coverage to certain matters of public interest;39 and the obligation to provide variety of content.40 It has been argued that applying special regulations of this type to commercial broadcasters is unfair and redundant when they are already subjected to the rules applicable to all businesses, such as anti-monopoly and consumer protection laws.41 However, commercial broadcasting regulations reflect a perception that general business laws are insufficient to protect the public interest.

Cultural goals, such as securing outlets for national or local artists, and social goals, such as securing for the population access to information and variety of content, are concerns not normally contemplated in devising general business laws. The special concentration rules in broadcasting serve a fundamentally different purpose than general anti-monopoly laws, which seek to prevent firms from attaining a dominant market position that would allow them to charge abusive prices. The goal of commercial broadcasting concentration rules is securing access to information from multiple viewpoints, rather than protecting consumers—who in commercial broadcasting are advertisers rather than the audience—from predatory pricing. As noted by Zlotlow: “[T]he most important element of economic regulation is completely absent from broadcast regulation. Broadcast regulation never dealt with regulating the rates consumers pay.”42

Whether the concerns which motivate special commercial broadcasting regulation are valid and whether they justify the type of rules often imposed in their name are topics outside the scope of this article. However, what is clear is that the goals pursued by general business law and those pursued by commercial broadcasting regulation sufficiently differ from each other for redundancy between the two not to be a serious concern. As will be discussed in Section 3, the relation between the regulation of nonprofit organizations and TSB regulation presents a different situation, with greater overlap between the two.

2.2 Regulation of State (Public Service) Broadcasters

As noted in Section 1, public sector broadcasters are normally classified as “official” or “public service,” depending on their level of independence from other elements of the government. Because official broadcasters are under the direct control of the government (or a branch thereof), they are characterized by a lack of regulation. 43 Governments typically retain full discretion over content and administrative decisions of those broadcasters following the “official” model.

In contrast, public service broadcasters (PSBs) should be independent from government. For this reason, their administration normally lies with a special statutory body subject to a specific mandate. The ideal is not always fulfilled, but, if good practices are followed, the mandate itself or additional regulations must include provisions aimed at securing the independence of PSBs.44

PSBs are sometimes expected to be independent not only from government but also from the influences that rule the commercial sector, and to provide a service that is distinct from that offered by commercial broadcasters.45 When this is the case, special regulations may be imposed to PSBs, such as restrictions on the type of content they can broadcast, on the sale of airtime, and on the airing of advertisements.46

Since the administrators of PSBs are normally special entities created only for that purpose, it is evident that a specific mandate and regulation are required for them to follow the desired policy goals. However, it is relevant to note the rationales that are normally behind the regulation of PSBs. Both of the concerns—securing independence from government and commercial influence, and securing the distinctiveness of their service—are also often behind the special regulations applied to TSBs, as discussed in the following section.

3. Rationales for Special Regulation of Third Sector Broadcasting

3.1 Preventing Unfair Gain

The first rationale for applying special regulation to TSB is to prevent license-holders from deriving unfair gain from their licenses.47 If TSB licensees are favored with free access to the spectrum or with a less onerous licensing process because of their declared social and nonprofit purpose, then it is a legitimate goal to prevent TSB licenses from being used as a backdoor for commercial activity and profit-seeking. However, preventing more favorable regulation from being abused is one of the objectives most commonly pursued through the general regulation of nonprofit organizations.48 If TSB licenses are restricted to nonprofit entities which are prohibited by law from having owners and from distributing profits to members,49 then it is not clear that additional regulation is necessary to prevent TSB licensees from deriving unfair gains.

3.2 Protecting Commercial Broadcasters from Unfair Competition

Another rationale for the special regulation of TSBs is protecting commercial broadcasters from unfair competition from TSB licensees.50 In the absence of special restrictions, TSBs may end up in direct competition with commercial broadcasters for audiences and advertisers. If TSB licenses are issued under less onerous conditions than commercial ones, TSBs could be considered to have an unfair advantage over commercial broadcasters. As will be discussed in Section 4, TSBs are often subject to restrictions on the type of content they can broadcast and on the airing of advertisements in order to protect commercial broadcasters.

Competition between third sector and commercial actors is not unique to broadcasting. Nonprofit organizations may also compete with commercial ones in delivering services in other fields such as health and education; nonprofit organizations’ ancillary trading activities for the purpose of fundraising likewise may lead to competition with commercial entities.51 Third sector organizations are sometimes restricted in their ability to trade and to engage in commercial activity if they benefit from rules which could give them an unfair advantage over commercial actors.52

If there are specific policies aimed at supporting TSB, in addition to those aimed at supporting the third sector in general, then these may give TSBs additional competitive advantages over their commercial counterparts, in comparison to those nonprofit organizations trading in other fields may have over their commercial counterparts. Accordingly, some specific regulation for the protection of commercial broadcasters may be justified, but only if TSBs are also favored by special policies.

It is assumed that, as nonprofit services, TSBs are naturally inclined to broadcast content that is not normally found on commercial stations, or to broadcast to audiences which have been neglected by the commercial sector.53 If this assumption is valid, then TSBs will not represent a threat to commercial broadcasters even in the absence of special restrictions. However, as discussed in Section 3.5, their nonprofit nature is not always considered sufficient to guarantee that their activities will significantly differ from those of commercial broadcasters.

3.3 Protecting the Independence of Third Sector Broadcasters

TSBs should be independent from government. It is a serious risk that less than well-intentioned governments may establish broadcasting outlets under their control and try to present them to the public as independent TSB outlets in order to increase their credibility. In this sense, special regulation may be necessary to protect TSBs from government influence.54 Measures designed to secure independence from government are sometimes found in general regulations applied to nonprofit organizations.55 However, the influential nature of the broadcasting activity and the fact that it is conducted using a public natural resource such as the radio spectrum may justify additional care being taken for protecting TSBs from government influence.

In addition to being independent from the government, TSBs are expected to be independent from other third parties.56 Restricting licenses to nonprofit organizations should guarantee that TSB outlets will not have owners. However, third parties who provide financial support to TSBs may be able to exercise influence over them. This risk is not unique to TSBs, of course; any type of nonprofit organization may be undesirably influenced by donors, especially if it relies to a large degree on a single donor.57

Regulations sometimes protect nonprofit organizations in general from undue influence from financial contributors, be they government or private.58 Even so, it can be difficult to achieve the optimal balance that protects the independence of organizations without preventing them from receiving the financial support they need.59 In this sense, special rules for TSBs will be desirable only if they are more effective than general ones in protecting their independence without diminishing their viability.

3.4 Securing the Representativeness of Third Sector Stations

TSBs are sometimes subjected to special regulation aimed at ensuring that they represent the whole community they are licensed to serve.60 As will be explained in Section 4.6, this end can be pursued through special governance requirements for licensees or through content regulation requiring stations to offer programming catering to all interests within the community. The regulation of nonprofit organizations in general does not ordinarily pursue representativeness. While theoretically there is no limit to the number of nonprofit organizations that can be established, however, the number of TSB stations that can operate in a given area is limited by frequency scarcity. If the authorities determine that they can only allocate spectrum for a single TSB station in an area, then it may be reasonable to impose a representativeness requirement upon this station. Accordingly, special regulation to promote representativeness on the part of TSB stations may be justified under some circumstances.

3.5 Securing the Distinctiveness of the Third Sector Output

In international human rights law it has been recognized that persons have a right to receive diverse information and that States have a positive obligation to implement policies conducive to securing the availability of such information.61 It has been proven that developing a third sector of broadcasting can contribute greatly to the diversity of content and information available to the population.62 Because they pursue different goals and are different in nature from commercial or State broadcasters, TSBs normally provide content that is neglected by the other two sectors.63 However, regulation sometimes directly requires them to provide such distinct content. The distinctiveness of the content can be secured by imposing either positive content obligations or negative content restrictions. Promoting diversity in this fashion is a concern specific to media outlets, which general regulations for nonprofit organizations do not address.

The validity of such regulations is debatable. If individuals have a right to exercise their freedom of expression for noncommercial purposes, even if their expression duplicates what the commercial sector or the State sector is providing, then it would not seem appropriate to limit TSBs to broadcasting content neglected by the other sectors.64 However, if a State decides to provide financial or technical assistance to TSBs with the goal of improving the diversity of information, then there may be some justification for requiring distinctiveness of output from TSBs.

This brief review of the rationales which commonly underlie TSB regulation shows significantly more overlap between the general regulation of nonprofit organizations and the regulation of TSBs than between the general regulation of businesses and the general regulation of commercial broadcasters. However, it also shows that general regulations applied to nonprofit organizations do not always cover all of a State’s legitimate goals concerning TSBs. This indicates that special regulation of TSB may sometimes be justified. Even so, a regulation may be unnecessary or undesirable even though it pursues legitimate goals that are unique to TSBs. The next section discusses some examples of regulations commonly applied to TSBs in pursuance of such goals in order to assess their merits.

4. Examples of Special Regulations That May Be Applied to Third Sector Broadcasters

4.1 Restrictions on the Expenditure of Surplus Generated by Third Sector Broadcasting Stations

Although TSBs often face financial hardships, it is also possible for their operations to generate surpluses. Generating an operational surplus is not contrary to the nonprofit nature of TSBs; indeed, it is desirable, as it may allow a TSB station to attain financial independence from government or other parties.65 TSBs, of course, should be prohibited from distributing any profits to members of the licensee organization, as this will be contrary to the third sector nature of the service. As already noted, this principle should be covered by the general regulation of nonprofit organizations. However, special TSB regulation sometimes imposes additional limits on what stations are allowed to do with their surpluses.

South African legislation specifies that any surplus generated by a TSB station can only be used to benefit the community it serves.67 In many other cases, stations are subject to narrower regulation that requires them to reinvest any surplus in the broadcasting service itself.68 Restricting the use of surplus to reinvestment in the broadcast service goes beyond preventing unfair gain and seeks to secure the distinctiveness of the third sector’s content. Under this restriction, TSBs must be ends in themselves; they cannot be used primarily as fundraising mechanisms for other nonprofit or charitable purposes. This should theoretically protect them from the temptation to maximize their income through providing programming similar to that of the commercial sector, contributing to the likelihood that TSBs will add to the diversity of content. Such a restriction can be justified where TSBs receive direct support and more favorable license conditions as part of a government’s policy aimed at improving the diversity of information and content available to its population. Nonprofit organizations should ideally be given the option of applying for commercial broadcasting licenses where they have broadcasting initiatives incompatible with the restrictions in TSB licenses.

4.2 Restrictions on the Selling of Airtime

TSBs are often subjected to restrictions in relation to selling airtime to third parties.69 Such restrictions protect commercial broadcasters from potentially unfair competition. In addition, there may be a concern that, if TSB stations are freely allowed to sell airtime, then they may be dominated by the same economic powers that dominate the commercial sector, to the detriment of diversity of content.70 In spite of this, the practice of selling airtime is not per se incompatible with the third sector nature of a broadcasting service. When asked whether the sale of airtime was contrary to the nonprofit requirement of community radio stations, the Administrative Decisions Tribunal of New South Wales (Australia) concluded:

The fact that the Radio Station enters into contracts and collects money from members who wish to broadcast a radio program, does not mean that their activities are being carried on for profit.71

Selling airtime to other nonprofit groups can be a valuable source of income for a TSB station.72 In addition, allowing TSB stations to sell airtime to nonprofit organizations can allow nonprofit groups that lack the capacity to operate a broadcast station on their own to be able to exercise their freedom of expression through the airwaves. If airtime is completely devoted to nonprofit content, then there is no reason to think that the content will be less diverse than if a single organization controlled it all. The potential detriment to the activities of commercial broadcasters is also lessened if TSB stations are limited to selling airtime to other nonprofit groups.

Allowing TSBs to sell airtime to commercial entities poses greater risks of unfair competition and homogeneous content. However, selling airtime to commercial entities can also allow TSBs to cross-subsidize their nonprofit content, potentially producing valuable programming that would not otherwise be possible. If they are required to reinvest any surplus in the broadcasting service, and if they are subjected to special content restrictions or quotas which secure the distinctiveness of their output,73 then allowing TSBs to sell airtime to commercial entities can be contribute to diversity of content. In order to lessen the potential detriment to commercial broadcasters, TSBs can be restricted on the amount of airtime they can sell to commercial entities without being outright prohibited, leaving the door open to a potentially valuable income source for TSBs.74

For the reasons explained, some restrictions to the capacity of TSBs to sell airtime to third parties can be justified, but an absolute prohibition of the practice is neither necessary nor desirable, especially if other regulations already promote diverse content and guarantee that licensees will not derive unfair gain.

4.3 Restrictions on the Broadcast of Advertisements

Prohibiting or restricting the selling of airtime can keep TSBs from broadcasting paid commercial advertisements. However, regardless of whether the sale of airtime is regulated, TSBs are sometimes subjected to regulations concerning advertisements. These regulations can take the form of general prohibitions on broadcasting any type of announcements that seek to persuade audiences to engage in a given action, independently of whether the station receives remuneration.75 A general prohibition of this kind can be detrimental to TSB stations, as it would inhibit them from self-promoting and from requesting donations from their listeners.76 Moreover, this type of prohibition inhibits TSB stations from donating airtime to promote nonprofit community events and from aiding other third sector initiatives by airing spots in support of their campaigns.77 The interest of protecting commercial broadcasters does not seem to justify such a broad prohibition, especially as TSBs can be valuable outlets for promoting nonprofit events and initiatives which cannot afford to advertise in the commercial media.

The airing of paid advertisements is a more delicate matter. Since paid advertisements are traditionally the main source of income for commercial broadcasters, concerns relating to unfair competition are the most sensitive here. Additionally, the perceived shortcomings of the commercial broadcasting sectors are usually blamed on its dependence on the advertising industry.78 Accordingly, policymakers often seek to shield TSBs from the influence of advertisers in order to ensure that they contribute to diversity by broadcasting content neglected by the commercial sector.79 As already noted, the same rationale is often behind restrictions on PSBs’ commercial activities.80 However, TSBs often oppose blanket prohibitions on the broadcast of paid advertisements. The World Association of Community Broadcasters (AMARC), the main representative of the sector, has explained:

The clear non-profit purpose of these media is confused with the necessary obtaining of the money needed to support its operation.

Financing of a radio station through advertising is one of the most important methods of funds collection available, and its prohibition has become a restriction to the exercise of freedom of expression.81

The United Nations, Organization of American States, and African Commission on Human and Peoples’ Rights special rapporteurs on freedom of expression, and the Organization for Security and Cooperation in Europe Representative on Freedom of the Media have expressed in a joint declaration that TSBs should be allowed to sell advertising.82 Access to advertising income may be essential for TSBs if other sources of funding are unavailable or insufficient, such as government grants and private donations.83 Even where it is not essential for TSB’s viability, allowing advertising is still desirable in order to prevent them from becoming reliant on a single source of funding, which could compromise their independence.84

Restricting the use of any surplus to reinvestment in the service itself and regulating the content directly may be sufficient to ensure that a TSB provides distinctive content. That content, in turn, may keep them from being in direct competition with commercial broadcasters. However, if concern remains over protecting commercial broadcasters and shielding TSBs from advertisers’ influence, paid advertisements can be regulated but not prohibited. For example, the amount of airtime TSBs can devote to advertisements can be limited; if commercial broadcasters are also subject to a limit, then a lower limit can be set for TSBs.85 In the U.K., TSBs are allowed to freely broadcast advertisements, but in order to protect their independence, they can derive no more than half of their annual income from advertisements.86 Chilean legislation authorizes TSBs to broadcast commercial announcements only if they relate to businesses or services in their service area, which allows TSBs to serve as outlets for smaller businesses which cannot afford to advertise in commercial broadcasters.87

Another formula commonly used is to prohibit conventional advertisements but allow other type of commercial mentions. For example, TSBs can acknowledge donors without directly encouraging audiences to consume the products or services offered by them.88 This form of restricted commercial mention is known as a “sponsorship” announcement.89 Allowing sponsorship announcements but not advertisements is common in the regulation of both TSBs and PSBs. But such regulations may go too far. It is not clear that the protection of commercial broadcasters or the desire to promote diversity warrants them. At a minimum, exceptions should be made for advertisements promoting the TSB itself, paid advertisements from other nonprofit entities, and advertisement of nonprofit events. Additionally and as discussed below, paid advertising from the government should be allowed even if advertising from the commercial sector is restricted.

4.4. Restrictions on Government Funding

Many TSBs will require government funding in order to be able to deliver their services. Under international law, States may even have a positive obligation to support TSBs by certain groups, such as indigenous peoples or national minority groups. Such an obligation may arise if the group has been traditionally disadvantaged and discriminated against in relation to access to broadcasting outlets or to broadcasting services in its own language, and if the group’s size or socioeconomic situation means that commercial broadcasting services cannot viably address their needs.90 As noted in Section 3.3, if TSBs become entirely dependent on government funding, then their independence can be compromised. The Organization of American States’ Special Rapporteur on Freedom of Expression has noted in relation to TSBs: “The law must include sufficient guarantees to prevent such media from becoming dependent on the State through government funding.”91

However, the independence of TSBs can be safeguarded without completely prohibiting them from accessing government funding. In the U.K. at one point, TSBs could not receive more than half of their income from government sources; this restriction has now been lifted.92 It is not clear whether a quantitative limit is always desirable, as some TSBs may warrant higher levels of government support.93

Multiple mechanisms can be used to protect the independence of TSBs without closing the door to funding that may be essential for their viability. For example, a law can provide that a fixed percentage of the licensing fees obtained from commercial broadcasters will be distributed equally among TSBs.94 TSBs can also be funded through a split of the PSB remit if there is one.95 Such funding mechanisms protect the independence of a TSB, because the government cannot change the level of its support in order to reward or punish the TSB stations for their editorial line. Under another approach, used in Canada and Australia, governments issue grants to private nonprofit bodies controlled by representatives of broadcasting’s third sector, and those independent bodies then distribute the funds to individual stations and TSB projects.96 Delegating the distribution of funds to an independent nonprofit body reduces the risk of government interference with a TSB’s editorial decisions.

Government advertisements can support TSBs, though this practice gives rise to the risk that the government will seek to influence broadcasters by abusing its discretion to decide where to place the advertisements.97 In this regard, the OAS special rapporteur on freedom of expression has noted: “Steps should be taken to prevent government advertising from creating government dependency among the private audiovisual media, whether they are nonprofit or for profit.”98

Despite the potential for abuse, TSBs should be allowed to broadcast government advertisements. Not only can such advertising provide essential funding to TSBs; given their ability to reach audiences neglected by the mainstream media, the advertising can also contribute significantly to government campaigns that require community outreach, such as those concerning crime or disease prevention.99 The OAS Rapporteur on Freedom of Expression has noted:

Discrimination in the distribution of advertising based on the model under which the media operate is unacceptable. In this respect, the exclusion of community or alternative broadcast media in the allocation of the advertising budget due to the mere fact that they operate under non-commercial criteria constitutes unacceptable discrimination under the American Convention.100

Although government advertising expenditures should reflect fair market principles,101 TSBs, especially those serving communities underserved by other media sectors, can be given special consideration, both to support the sector and to reach audiences not reached by other services. Threats to the independence of TSBs can be reduced by ensuring that they have access to alternative source of funding, such as commercial advertising, private donations, and nondiscretionary government grants.

4.5. Content Restrictions and Positive Content Obligations

TSBs are often subjected to content regulations in order to secure the distinctiveness of their output and to protect commercial broadcasters from unfair competition. TSBs are frequently licensed to serve a geographic community or a community of interest, such as a particular religious, ethnic or age group.102 Sometimes, TSBs are required to broadcast only content which is of interest to the community they are licensed to serve. For example, Indian regulations for TSBs specify that their programming “should be of immediate relevance to the community”103 and prohibits them from broadcasting news or commenting on current affairs issues.104 South African legislation establishes that TSBs must “[p]rovide a distinct broadcasting service dealing specifically with community issues which are not normally dealt with by the broadcasting service covering the same area.”105 In some instances, TSBs are prohibited from rebroadcasting content from commercial broadcasters, from networking with them,106 and even from networking with other TSBs.107 AMARC has opposed this type of restriction.108

Although TSBs should be expected to prioritize the needs of the communities they are licensed to serve, no legitimate interests warrant prohibiting them from providing programming of wider interest or from commenting on issues of general interest. In Australia, this has been recognized by a Federal Court, which concluded that the obligation of TSBs to provide content of interest to the community cannot be interpreted as a prohibition against broadcasting content that appeals to persons outside that community, because all communities share interests with the larger society they are part of.109 Moreover, TSBs not only allow communities to provide programming for themselves; they can also allow disadvantaged communities to communicate their views, interests, and concerns to the wider society.110 This is congruent with the goal of diversity of content, as the general population is likely to benefit from access to alternative point of views on matters of general concern.111 The U.K. Community Radio Order establishes that community stations primarily serve their communities, but that they can also serve other members of the public.112

The legitimate interests of promoting diversity of content and protecting commercial broadcasters are better pursued by imposing positive content requirements than by prohibiting any content that other sectors are allowed to broadcast, which abridges the nonprofit actors’ freedom of expression. For example, TSBs can be required to devote airtime to matters of local interest113 or to locally produced content.114 TSBs can also be required to devote airtime to national or local artists who may not find opportunities in the commercial media.115 When a station is licensed to serve a specific cultural or linguistic community, it can be required to devote airtime to programming related to that culture or in that language.116 In Canada, TSB radio stations are subject to quotas requiring the broadcast of music not commonly played on commercial stations.117 Italy imposes a quota requiring a particular amount of content to be produced by the station itself, which can be a less restrictive alternative to a ban on rebroadcasting content from other stations or on engaging in network broadcasting.118

Such positive content obligations are less detrimental to the freedom of expression of TSBs than are content restrictions. Positive content obligations can be justified when TSBs receive government support for the purpose of increasing diversity, serving local needs, or serving especially disadvantaged communities.

4.6. Governance and Representativeness Regulation

TSBs can be subjected to regulations in order to ensure that they represent the community they are licensed to serve. This regulation can take the form of requirements for the licensee’s governance structure. For example, South African legislation requires that a TSB license holder “must be managed and controlled by a board which must be democratically elected, from members of the community in the licensed geographic area.”119 In Australia, the licensing authority assesses the governance structure of applicants in order to determine whether they are representative of the community; factors include whether membership is accessible to the entirety of the community claimed to be represented, whether decision making policies (including those for programming) are transparent, and whether any provisions would make the applicant accountable to the community.120

The regulation can also take the form of a requirement to allow community members to particulate in the management of the station and in the production of content, and a prohibition against TSBs administrators’ arbitrarily excluding persons or groups from participation.121 TSBs can also be required to provide airtime to independent groups that are part of the community but not directly involved in the administration of the station. For example, TSBs in Uruguay are required to make airtime available for independent productions by community members and social groups in the service area.122 Requirements of this type can be justified if TSBs are granted access to spectrum for free or if their license fees are significantly less than those of commercial broadcasters.

5. How Overregulation Can Impair the Development of Third Sector Broadcasting

In the previous section it has been shown that circumstances may justify the imposition of special regulations on TSBs, including restrictions not applied to commercial broadcasters. However, excessive regulation can hinder the development of the sector. The OAS Special Rapporteur on Freedom of Expression has noted:

The mere legal recognition of access to a license is not enough to guarantee freedom of expression if there are discriminatory or arbitrary conditions on the use of licenses that severely limit the ability of the private nonprofit sectors to utilize the frequencies, as well as the general public’s right to receive the broadcasts. The right to freedom of expression recognized in Article 13 of the American Convention prohibits the placing of arbitrary or discriminatory limits on the use of community broadcast licenses.123

The risk has been acknowledged by a Canadian Government Task Force on Broadcasting Policy, which concluded:

Too much control over community broadcasting would change its nature and perhaps stifle its spontaneity. It is nevertheless important to give community radio and television a statutory basis to allow it to fulfil the role for granting access to the system, a responsibility which the other two sectors, with other calls on their services have been unable to fulfil.124

Even the type of regulations characterized above as justifiable can threaten the viability and effectiveness of TSBs. For example, while diversity of funding is desirable, restricting the amount of funding that TSBs can receive from a single source can impede the development of the stations when funding is available only from the government or only from a single local or international private donor; local and national content requirements can pose a significant barrier to TSBs that require home country programming to serve communities of immigrant or refugees;125 restrictions on rebroadcasting and networking can burden stations that lack the resources required to produce enough content for a full-time schedule;126 and complicated governance regulations can hinder initiatives that cannot afford legal counsel.127

For example, TSBs serving indigenous communities in remote areas of Canada and Australia were needlessly burdened by restrictions on the broadcast of advertisements.128 Since these were areas underserved by commercial broadcasters, there was no risk of unfair competition, and the amount of advertising revenue that could be raised in these areas was too limited for unfair profiting to be a concern.129 The obligations to keep track of airtime devoted to advertising and to report on this to the regulatory authorities were undesirable administrative burdens for stations with very limited resources.

These examples illustrate why even those regulations that are acceptable in principle should not be implemented without careful consideration of the context and the potential effect on the development of the sector. The danger of overregulation might be reduced by applying different regulation to different types of TSBs or by implementing a system of exceptions for some stations. Canada is the leading example of this practice, as it imposes lower national content quotas on ethnic broadcasters than on other TSBs.130 TSBs servicing remote indigenous communities in Canada have also received exemptions from general rules that could affect their viability; this included an exemption from the advertisement restriction before this was eliminated for general TSB stations.131 Australia exempted remote indigenous television broadcasters from burdensome governance requirements applied to other third sector television services.132

6. How Special Regulation Can Aid the Development of Third Sector Broadcasting

Despite the dangers of overregulation, special regulation is not invariably detrimental to the development of the sector, nor should it be seen as an evil to be withstood by TSBs as a quid pro quo for government support. Well-crafted regulation can actually aid the development of the sector. Financial and governance regulation, for example, can improve the credibility and image of the sector as a whole by ensuring that TSB licenses are not used for improper purposes; as a result, TSBs may be more likely to receive support from governments and communities. In addition, regulations can clarify society’s expectations for TSBs. If these expectations are pre-established, funding systems can be implemented to provide government financial support to TSBs automatically if they comply with the applicable regulations and their license conditions. This can benefit TSBs greatly. If their funding is not dependent on an assessment of their social contribution made under unclear criteria, they can engage in longer-term planning.133

Another potential benefit exists as well. If special regulations stipulate that TSBs must be nonprofit in nature, then access to TSB licenses can be separated from the requirement of incorporating as a nonprofit legal person. Although TSB licenses are generally limited to registered nonprofit legal entities, some governments, such as Uruguay and Ireland, allow groups of persons with nonprofit purposes to apply for TSB licenses without a legal incorporation requirement.134 It is an unfortunate reality than the procedures for creating a nonprofit entity are often unduly burdensome. In these cases, allowing persons to establish TSB stations without going through such procedures can greatly aid the development of the sector.

Conclusion

Special regulation of TSBs can be justifiable and even advisable in certain contexts, even if the underlying concerns are already addressed by regulations applied to all nonprofit entities. Indeed, well-crafted regulation can actually aid the sector. However, excessive or unnecessary regulation can infringe upon nonprofit actors’ freedom of expression and deprive populations from broadcasting services that could be of great value to them. Before applying any policies that may restrict the activities of TSBs, accordingly, the potential effect needs to be carefully considered, including whether any less restrictive measures could be equally effective in pursuing the same goals. Since different types of TSBs operate under very different realities, even within the same jurisdiction, one should also consider whether any regulations could prove too burdensome for a type of TSB and whether exempting them from the general rules could advance the public interest.